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Savannah Resources gains 20% in Mozambique’s Mutamba project

Savannah Resources has gained a 20% interest in the Mutamba mineral sands project in Mozambique and completed a scoping study for it.

The project is being developed by Savannah and Rio Tinto as part of a consortium agreement between the two parties. Savannah appointed TZ Minerals International to undertake the scoping study on the Mutamba development.

The study determined that there is potential for the long-life mineral sands project that is estimated to ensure financial returns with modest capital requirements. Mining methods such as the dredge wet and the front-end loader (FEL) / truck and dozer trap dry were reviewed for applicability to the Mutamba project.

Savannah has an option to increase its interest in the project to 51%, subject to key milestones being met.

With an initial mine-life of 30 years, the project has estimated resources of 451 million tonnes at 6% of total heavy minerals.

Savannah CEO David Archer said: “The results of the scoping study outline the potential for a long life, robust project at a time of increasing demand for titanium feedstocks and strong price growth.

“Mutamba is a tier one deposit that is well placed to provide a long-term, reliable supply of ilmenite, zircon and rutile.”

If the pricing is assumed at $204/t for ilmenite and $275 for non-magnetic concentrate (rutile and zircon) over the life, the project is expected to generate average pre-tax cash flows of $52m per annum, with a life of mine revenue of $3.88bn.

"With an initial mine-life of 30 years, the project has estimated resources of 451 million tonnes."

However, if a pricing model of $222/t for ilmenite and $300 for non-magnetic concentrate is considered, the company expects average pre-tax cash flows of $62m per annum with a life of mine revenue of $4.23bn.

The project is expected to create 332 direct and 1,000 indirect jobs.

First production will begin in 2020, with an estimated average annual production of 456,000t of roasted ilmenite and 118,000t of non-magnetic concentrate.

Savannah can now earn a further 15% stake in the project by completing a prefeasibility study.